Billions of GI Bill funds go to for-profit schools

KIMBERLY HEFLINGAP Education WriterPublished: July 30, 2014 4:25PM

WASHINGTON (AP) -- Iraq and Afghanistan veterans have flocked to for-profit colleges, including a troubled chain that is closing or selling its campuses amid a series of federal and state investigations.

A report to be released Wednesday from the office of Sen. Tom Harkin, D-Iowa, a critic of the for-profit education industry who chairs the Senate Health, Education, Labor and Pensions committee, finds that for-profit colleges received $1.7 billion in Post-9/11 GI Bill benefits in the 2012-2013 school term. About a quarter of benefits paid under the program went to the for-profit sector.

Among the top 10 recipient schools in terms of GI Bill funds, eight were from the for-profit sector. One of them was Corinthian Colleges, a chain based in Santa Ana, California, that recently reached an agreement with the Education Department to sell or close its more than 90 U.S. campuses. The Education Department has said it has concerns about the chain's operations that included allegations of falsifying job placement data used in marketing claims to prospective students, and allegations of altered grades and attendance.

Since the new GI Bill rolled out in 2009, Corinthian has received $186 million in the new GI Bill funds, the report said. Last week, the advocacy group Student Veterans of America placed the schools under the Corinthian umbrella -- Everest College, Heald College and WyoTech schools -- on its "not recommended" list.

Including Corinthian, the report finds that seven of the eight companies face investigations by states attorneys general or federal agencies for "deceptive and misleading recruiting" or other possible federal violations. Even as overall enrollment decreased at the eight schools since 2009, it says the number of veterans enrolled at these schools increased.

The new GI Bill program provides the most generous school benefits paid to warfighters since the original bill was enacted in 1944. It can be used by a veteran or a member of the immediate family -- and more than a million people have used it so far.

For-profit colleges have been popular among veterans, in part, because of offerings in skilled trades and flexibility such as online classes.

Michael Dakduk, the vice president for military and veterans affairs with the Association of Private Sector Colleges, said in a statement: "It is no surprise that members of the military choose our institutions because we provide them with career-focused programs, important support services and flexibility they need to complete their education."

But, the for-profit sector has among the highest student loan default rates and lowest graduation rates in higher education and has been a target of Democrats. The Obama administration has pushed "gainful employment" regulations that would penalize career-oriented programs that produce graduates without the training needed to find a job with a salary that will allow them to pay off their debt.

Harkin's report finds that the average cost for a veteran to attend a for-profit college is $7,972, compared to $3,914 for a public college -- about twice the price.

The two top recipients of GI Bill money not in the for-profit sector were the public University of Maryland system and the non-profit Embry-Riddle Aeronautical University, according to the report.

Earlier this year, the Student Veterans of America issued a report that said a little more than half of the veterans who got college money under the GI Bill since 2009 eventually graduated. The rate was lower than the graduation rate for traditional students, who generally enroll out of high school, but higher than for veterans' non-traditional peers -- those students who also tend to be older and have families and jobs.

It found that about three-quarters of the student veterans who graduated did so from public institutions. Another 15.5 percent attended private universities, while about 13 percent attended for-profit schools.

Another group, the Iraq and Afghanistan Veterans of America, has lobbied against what is known as the "90/10" rule that requires colleges to receive at least 10 percent of their revenue from sources other than the federal government. Students using the new GI Bill don't count toward the limit, so the veterans said they are aggressively targeted by the for-profit industry.